Three Companies Settle False Claims Act Allegations for Receiving two PPP Loans

Three California companies have agreed to settle allegations under the False Claims Act with the Department of Justice for improperly receiving and retaining more than one Paycheck Protection Program (PPP) loan, in violation of PPP rules. The three companies have agreed to pay a total of $530,000 in civil damages and penalties.

Congress created the PPP at the beginning of the COVID-19 pandemic to provide emergency financial support to small businesses struggling to pay employees and other business expenses. The program required loan applicants to certify that they would not receive more than one PPP loan prior to December 31, 2020.

The three companies violated this rule by receiving and retaining more than one PPP loan. For instance, one company—a Palo Alto bakery—agreed to pay $430,000 to settle allegations that it received and retained a duplicate loan in 2020 and then later improperly sought and received forgiveness for the duplicate loan.

Another company—an industrial equipment supplier located in Santa Clara—paid $50,000 in civil penalties to settle allegations that it received and retained a duplicate loan. The third company—a licensed general contractor located in Castro Valley—also paid $50,000 in civil damages and penalties to settle allegations that it received and retained a duplicate loan.

The settlements resolve a qui tam action brought under the whistleblower provision of the False Claims Act. The whistleblower will receive a total of approximately $80,000 in connection with the three settlements. The resolution was the result of efforts made in part by the COVID-19 Fraud Enforcement Task Force, a DOJ group established to combat and prevent pandemic-related fraud.